5 reasons Obama’s transformative power plan won’t transform anything

Just about everyone seems to agree that President Barack Obama’s Clean Power
Plan is an “ambitious” effort to rein in the electric sector’s carbon
emissions. There’s intense debate whether it’s good-ambitious, a
“sweeping” and “groundbreaking” effort to fight pollution and climate
change, or bad-ambitious, a “draconian” and “job-killing” assault on the
coal industry that will jack up America’s utility bills. But it’s been
taken for granted on both sides that the Environmental Protection
Agency’s draft regulations,
expected to be finalized this summer, would smash the status
quo.

Actually, they’re pretty weak.

This
is partly because the Obama administration, understandably, wants the
first-ever U.S. carbon limits to survive legal challenges, and to
maintain enough political support to prevent Congress from shredding
them. After she released the draft plan last June, EPA administrator
Gina McCarthy told me her goal was something “doable, reasonable, and
practical,” not something utopian. The mere existence of carbon rules should send a
signal to markets about greenhouse-gas emissions, adding to the
riskiness of investments in coal plants that already face stricter
limits on soot, mercury, sulfur dioxide, and other toxics in the Obama
era. The rules should also bolster Obama’s negotiators in this year’s
global climate talks in Paris, sending a message that the U.S. is doing
something about carbon.

But while environmentalists have
hailed the Clean Power Plan as Obama’s crowning climate achievement, and
Republicans like Senate Majority Leader Mitch McConnell have denounced
it as climate radicalism, it doesn’t really anticipate more dramatic
emissions reductions than we’re getting now. Overall, it seeks to cut
power-sector emissions 30 percent from 2005 levels by 2030. That sounds
like a lot, but the ongoing transformation of the U.S. grid—a shift from
carbon-intensive coal to lower-carbon natural gas and zero-carbon
renewables, plus a general easing of electricity demand—has already
gotten us almost halfway to that goal, and the Clean Power Plan hasn’t
even taken effect yet. Utilities would have to cut emissions less than 1
percent a year to make it the rest of the way. At that tepid rate, it’s
hard to see how America could fulfill Obama’s genuinely ambitious
recent pledge to cut our entire
economy’s emissions 26 to 28 percent by 2025, since the coal-heavy power
sector is clearly our lowest-hanging fruit.

The EPA expects to
finalize the plan this summer, so it still could get stronger. And any
plan that regulates carbon will qualify as “historic,” the
other adjective you hear a lot in the current debate. In its current form, though, at least five
elements of the Obama plan—its treatment of coal, its state targets, its
treatment of renewables, its approach to bioenergy, and its
timelines—are a long way from “ambitious.”

1. Coal The EPA insists the Clean Power Plan is about limiting carbon from
power plants, not limiting coal. But let’s be honest: Limiting carbon
from power plants means limiting coal, which produces 75 percent of the
electricity sector’s emissions. That’s why critics have portrayed the
plan as a nuclear weapon in the war on coal. The thing is, the draft
rules won’t do much to coal. It’s already declining, but the plan
doesn’t really aim to accelerate the decline.

One giveaway is
the plan’s projection that U.S. coal generation will drop just 30
percent from 2005 levels by 2030. It’s already dropped 20 percent—and
aging coal plants with another 50 gigawatts of capacity, nearly 15
percent of the U.S. fleet, are already scheduled for retirement. In
other words, the EPA expects the decline of coal to abate somewhat under
the Clean Power Plan, even though the average coal plant is over 40
years old, nobody is planning new coal plants, and the coal industry is
already scrambling to comply with a barrage of new clean-air and
clean-water regulations that have nothing to do with carbon. The Sierra
Club’s Beyond Coal campaign is almost on schedule to achieve its goal of
retiring every U.S. coal plant by 2030, yet the EPA plan projects that
30 percent of our power will still come from coal that year. That would
be a disaster for the climate.

In fairness, those lame EPA
projections are not binding. And McCarthy herself told me not to put too
much stock in them. In a November interview, she predicted that “in the
end, you will probably see significantly more emissions reductions than
we anticipated.” That’s almost certainly true, because utilities seem likely to keep
retiring coal plants at a rapid rate. But Obama’s carbon rules do not
seem likely to drive many of those retirements—and the EPA’s nationwide
projections are not the only giveaway.

2. State targets The Clean Power Plan doesn’t impose strict emissions limits; it merely
assigns states targets for reducing their carbon intensity. The plan
doesn’t mandate how to achieve those targets, either; it lets the states
chart their own paths. While overwrought critics squeal about
bureaucratic tyranny, the EPA’s documents outlining its plan are almost
laughably deferential, full of references to “maximizing flexibility,”
“making sure states have the flexibility they need,” “offering states
broad flexibility,” and so on. This actually makes a lot of sense,
practically as well as legally and politically. Washington bureaucrats
don’t need to micromanage how states decide to cut their emissions. They
just need to make sure emissions get cut.

The glaring
hole in the plan is not the flexibility it gives states to meet targets,
but the targets themselves. The states with the deepest addictions to
coal—usually in the form of filthy plants built before the passage of
the Clean Air Act—have some of the weakest targets for reducing their
emissions. It’s amusing that McConnell is calling for states to rise up
and defy the EPA, since his home state of Kentucky will only have to cut
its emissions 18 percent from 2005 levels by 2030, and it’s already
retiring so many inefficient coal boilers that state officials have said
they doubt they’ll need to shut down any more to meet their target. The
EPA came up with similarly modest targets for coal-rich states like
West Virginia, Wyoming and Indiana. McCarthy told me the agency was
trying to avoid years of negotiations about what was achievable, but
when a plan sets targets that are likely to be achieved even without the
plan, it’s hard to see the point of the plan.

3. Renewables The U.S. is enjoying a green revolution, with wind power up threefold
in the Obama era and solar power up more than tenfold, thanks to a
remarkable decline in costs that has continued to this day. But Obama’s
EPA apparently believes this boom is about to go bust. If its
projections for coal are unambitious, its projections for renewables are
downright ridiculous, essentially assuming a collapse of America’s
fastest-growing electricity sector.

For example: At least five
states—Iowa, Maine, Minnesota, South Dakota, and North Dakota—are
already producing more renewable electricity than they would be expected
to produce under the Clean Power Plan by 2030. And at least seventeen
states already have renewable power targets that are higher than the
EPA’s. The Clean Power Plan target for California is 21 percent
renewable by 2030, even though it’s required by law to reach 33 percent
by 2020; the plan’s target for Hawaii is a mere 10 percent by 2030,
while the state’s official goal is 40 percent. Overall, the draft EPA
plan predicted just 21 gigawatts of new renewable-power capacity
nationwide by 2030; the U.S. installed about half that much just last
year.

I offered to bet McCarthy that the U.S. would beat the
draft plan’s projections for renewables, but she said she agreed they
were too low. Wind and solar power are already much cheaper than the EPA
assumed when devising its models. But the body language out of the EPA,
which already faces Clean Power Plan lawsuits by a dozen states, has
not suggested that the final plan will be dramatically stronger.

4. Bioenergy When environmentalists have aired concerns about the plan, they’ve
usually focused on its favorable treatment of nuclear power and natural
gas. But nuclear power, setting aside its many challenges, is carbon-free. Why wouldn’t it get favorable treatment in carbon
regulations? Natural gas does emit carbon, but much less than coal, so
it would also look like an attractive substitute in just about any
carbon regime. But as I wrote in January, the plan’s favorable treatment of bioenergy—power derived from trees, crops, or other plants—could be much more problematic.

The
problem is that an EPA policy memo suggested the plan will treat most
bioenergy as carbon-neutral, which could encourage massive amounts of
deforestation, which would not be carbon-neutral at all. The EPA has
waffled a bit about the memo, so it’s not clear whether the final plan’s
approach to bioenergy will be as generous to the timber industry.
Suffice to say that some bioenergy critics believe a lenient approach
could end up producing far more emissions through the cutting and
burning of trees than the rest of the Clean Power Plan would reduce.

5. Timelines If the Obama administration finalizes the Clean Power Plan this summer,
and if it isn’t held up by litigation, states will be required to
submit implementation plans by June 2016. Not really, though. They’ll be
allowed to request extensions of up to two years. Then they EPA will
have another year to review their plans. They won’t be required to begin
implementation until 2020—assuming no litigation delays, and no reversals by
future administrations. And when McCarthy spoke to the National
Association of Regulatory Utility Commissioners in February, she hinted
that the EPA might give states even more time.

“You and I know that flexibility is the key to this proposal,” she said.

This
is all a bit odd, because the EPA has set “interim goals” for 2020 that
are much more ambitious than its targets for 2030. Overall power-sector
emissions are somehow expected to drop more than 10 percent within the
next five years, before implementation even begins, then less than 5
percent over the next ten years, after implementation is in full swing.
It’s as if the carbon rules were supposed to relieve the pressure on
states to reduce carbon.

In fact, they were supposed to
minimize the risk of legal and political reversals. McCarthy is a
climate hawk, and Obama cares about his climate legacy; his 2009
stimulus bill helped create the renewables boom, and a host of other EPA regulations
have helped decimate the coal industry. There is every reason to believe
the U.S. will continue to reduce its emissions whether or not the Clean
Power Plan turns out to be ambitious.

But an ambitious plan would reduce more emissions. And isn’t that supposed to be the point?